Tinkler threatens board in bid to halt decline

Mr Tinkler is said to be unhappy with delays to the development of the Maules Creek project that Whitehaven acquired through Aston Photo Jonathon Carroll

Jamie Freed, Matthew Stevens and Anne Hyland

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Nathan Tinkler is considering removing Whitehaven Coal directors to regain control over the miner in a bid to shore up his finances.

The Australian Financial Review understands Mr Tinkler, whose $5.25 billion takeover bid for the miner collapsed last month, has suggested to at least one senior company insider that he may seek the removal of directors at Whitehaven as he previously has at Aston Resources and Coalworks. Mr Tinkler has a 21.4 per cent stake in the company. The move could put the embattled entrepreneur in a position to determine the destiny of his biggest asset at a time when he is facing calls from creditors including Mirvac and Blackwood Corp for payments worth a combined $46 million.

Control of the Whitehaven board could help facilitate asset sales, higher dividend payouts and/or a switch to new infrastructure providers. But it would also be likely to further unnerve shareholders.

The miner’s share price has nearly halved since it completed a merger with Aston and Boardwalk Resources in May in a deal that gave Mr Tinkler his stake.

Since Mr Tinkler’s takeover proposal was pulled for lack of financing last month, shares have fallen by 12 per cent amid concerns that he has significant loans over his stake which could be called in by financiers.

Highly-regarded management team

The Whitehaven management team, led by Tony Haggerty, is regarded by many investors as one of the best in the coal industry.

“If the existing management left I think the stock would be under a bit of pressure,” RBC Capital Markets analyst Chris Drew said. “I think the market has got quite a bit of respect for the management team there. A change would be surprise.”

Mr Tinkler has a reputation for being unpredictable. Last November, he used his 31.6 per cent Aston stake to seek the resignations of well-regarded chief executive Todd Hannigan and chief financial officer Tom Todd, then took the chairman’s role himself. Shares plunged 11 per cent and did not recover until Aston agreed to a merger with Whitehaven in December. At Coalworks, Mr Tinkler succeeding in ousting two directors with the backing of only 35 per cent of the register.

Mr Tinkler is said to be unhappy with delays to the development of the Maules Creek project that Whitehaven acquired through Aston. Mr Haggarty has attributed the delays to slow NSW government approvals. Other miners including Yancoal have been struggling with similar project delays.

Board composition

Whitehaven has eight directors but executive director Allan Davies has already said he will step down from his board role at the annual meeting. The other directors are Mr Haggarty, chairman Mark Vaile, John Conde, Philip Christensen, Paul Flynn, Rick Gazzard and Christine McLoughlin.

Mr Conde is a long-serving independent director of Whitehaven who had served as chairman before its merger with Aston. Mr Christensen and Mr Flynn serve as Mr Tinkler’s nominees and are not considered independent. Mr Vaile and Mr Gazzard, who are considered independent, had been directors at Aston before the merger with Whitehaven. Ms McLoughlin, also an independent director, joined the board in May when the merger was completed.

Mr Vaile, a former deputy prime minister, said yesterday he was not aware Mr Tinkler had signalled intentions to make a play for control of the board. “It’s news to me. I’ll make some enquiries,” he said.

“The first the company or the board was made aware of anything was the story in [the AFR’s] Street Talk [column]. I haven’t had e-mails from anybody, particularly not from Nathan. I haven’t had the opportunity of talking to any of my colleagues that may have. It’s hard to make any comment until I do.”

A spokesman for Mr Tinkler declined to comment.

One industry insider questioned whether Mr Tinkler would move on the board. “He might threaten but I doubt he will follow through. He can’t afford another public failure,” the source said.

Whitehaven last night said Mr Vale, Mr Christensen, Mr Flynn, Mr Gazzard and Ms McLoughlin would be up for election at its annual meeting on November 1. That means an extraordinary general meeting could be required to remove Mr Haggarty. However, not all investors vote at shareholder meetings. But in that case, he had the advantage of surprise because his intentions had not been made public beforehand.

Tough task for Tinkler

Market sources said it would likely be difficult for Mr Tinkler to succeed in removing Mr Haggarty, who is likely to have the backing of at least 20 per cent of the register including private equity groups First Reserve and AMCI as a starting point and are respected by many other institutional investors.

Mr Tinkler also has some long-time backers on the Whitehaven register, including Farallon Capital, Kuok Group and Burlingham International, which if they supported him could give him a starting point of around 30 per cent.

One analyst said many clients were now avoiding Whitehaven in light of given concerns that Mr Tinkler’s shares could be sold down to institutional investors at a discount as a result of a margin call.

“Getting Tinkler out of the story entirely would de-risk the stock,” the analyst said.

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Matthew Stevens – Speculation that Nathan Tinkler is threatening some sort of proxy war on his erstwhile takeover target seems to be as accurate as it is improbable.

BRW Young Rich – Technology entrepreneurs Mike Cannon-Brookes and Scott Farquhar – founders of software development company Atlassian – have replaced Nathan Tinkler at the top of the BRW Young Rich list in a landmark shift.